Operating profit

Profit generated by a company's operations before interest payments and tax is called operating profit.

Operating profit is closely related to EBIT, and is usually the same.

There may be a difference between EBIT and operating profit. It is almost always small. It comes from the exclusion from operating profit of certain profits or losses that are not part of the operations of a business — such as profits on the sale of businesses.

Although the definition of trading profit can vary, it is usually very similar to operating profit or adjusted operating profit.

Operating profit is an important measure because it tells you how much money a company (or a division: it is often disclosed at that level as well) makes from the actual operations of its business, without the effects of financing or tax.

Operating profit is subject to some distortions, hence the use of measures such as adjusted operating profit and EBITA.

There is also a good case for looking at returns to all providers of capital in total by deducting tax, which gives us NOPAT

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